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Google IPO Swami

michael posted more than 9 years ago | from the GIGO dept.

Google 255

The Google IPO Swami writes: "I'm running an experiment and Slashdot readers would be good contributors. As you may know, Google recently announced that they will be using a unique dutch auction structure to price shares of their IPO. Instead of having the underwriters determine the opening price, the price will be set by the demand of investors that register to participate. I'm interested in how well the public can estimate this demand and the price of the shares to be offered. I'm giving away free shares in Google to find out. The person that comes closest to estimating the opening and closing price of the stock on the IPO date will win shares in the company."

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255 comments

euhm ... (1, Interesting)

cnf (96794) | more than 9 years ago | (#9169044)

Here goes nothing ...

20$ - 80$ ?

Re:euhm ... (5, Funny)

skasingularity (777400) | more than 9 years ago | (#9169055)

Is that all google is to you? $80?

NO GMAIL FOR YOU!

Re:euhm ... (0)

Anonymous Coward | more than 9 years ago | (#9169179)

Aren't all the numbers in thousands, so that's $80,000?

Re:euhm ... (1)

AKnightCowboy (608632) | more than 9 years ago | (#9169231)

Is that all google is to you? $80?

I'd be completely amazed if this stock was more than $15. It's a friggin search engine company. IBM might be worth $80/share, but Google is not.

Re:euhm ... (2, Informative)

Anonymous Coward | more than 9 years ago | (#9169284)

So if IBM has 200B shares is it still a bargin? What if google released 100 shares, what would you buy them for - 80 dollars still? Share price != the value of the company. Market Value of the company = Share Price * No. of outstanding shares.

Who knows? (4, Insightful)

LostCluster (625375) | more than 9 years ago | (#9169046)

One thing that this data will almost certainly show is that data entered today will we totally wild guesses and be totally disconnected from the real factors that determine the IPO price.

Macro-economic factors such as interest rates, price of oil, unemployment, and who the US President will be on the date of the IPO are still unknown. Hey, even the date of the IPO is still an unknown!

Bookmark the site and revisit it as Google gets further along the road to IPO. That's the only way to win at this game unless you're an extremely good guesser.

Re:Who knows? (1)

DAldredge (2353) | more than 9 years ago | (#9169162)

What do those factors have to do with the price of a tech ipo?

Not a damn thing.

Re:Who knows? (4, Insightful)

LostCluster (625375) | more than 9 years ago | (#9169221)

What do those factors have to do with the price of a tech ipo?

Because Google's stock has to compete in the universe of all investments. In short, the value of a share of Google will be in part influced by the value of all other potential investments available.

Each macro force has very little direct impact on the Google price, but there's a whole lot of them out there, and they all add up...

Re:Who knows? (4, Interesting)

DAldredge (2353) | more than 9 years ago | (#9169259)

Yes, googles stock has to compete with other stocks/bonds/etc but that doesn't mean that the stock will exhibit rational behavior on the day it IPO's.

You are looking at the stock market as a pure numbers game when a large factor in the rise and/or fall of googles stock on IPO day will be how people 'feel'.

That is what caused the tulip trouble and the dot com trouble.

Re:Who knows? (0)

Anonymous Coward | more than 9 years ago | (#9169167)

Bookmark the site and revisit it as Google gets further along the road to IPO. That's the only way to win at this game unless you're an extremely good guesser.

But by then all the good guesses will be gone!

How does the site handle multiple guesses around the same value - first come, first serve? I know so little about stocks that an extremely good guess is the best I could ever come up with anyway. But given that they are supposed to be chaotic, perhaps that's the same for everyone who's even in the ballpark.

Re:Who knows? (1)

gregfortune (313889) | more than 9 years ago | (#9169171)

And it doesn't matter how early you guess if someone else guesses the same value...

"Ties will be settled by a random drawing."

On the other hand, guess now and then guess again later if you think you were wrong.

"You can enter multiple times, but only your last estimate will be considered. Previous entries will be discarded if you re-submit your picks."

Re:Who knows? (5, Interesting)

in7ane (678796) | more than 9 years ago | (#9169172)

No, no, no, you got it all wrong. Winning is certain:

Two 0-999 ranges
i.e. 1000*1000 possible combinations Need 1,000,000 submissions to 'win'

Spamgourmet.com allows dynamic forwarding

g000000.2.name@spamgourmet.com
To
g999999.2.name@spamgourmet.com

Here I come!

/wonders if a few minutes to write the script is worth it for a few shares...

Its good... (1)

Mr. Troll (202208) | more than 9 years ago | (#9169048)

Anyone else think its good that Google isn't releaseing guidance about upcoming quarters? /all spelling errors intentional

I'm sure to win this (5, Funny)

Anonymous Coward | more than 9 years ago | (#9169051)

Martha Stewart has some "special" information she passed in to me.

Here .... (1)

charlos (775798) | more than 9 years ago | (#9169057)

Well based on what I have researched ... $65

marketing scam? (2, Insightful)

bigfatslob (748856) | more than 9 years ago | (#9169078)

Does this seem like a pre-IPO buzz-generator to anyone -else-?

Maybe I'm too cynical.

NO, IT'S JUST... (0)

Anonymous Coward | more than 9 years ago | (#9169206)

...that you're a troll and everyone can check your posting history of failed "pfirst psots" to verify.

NOT A SCAM!!! (0, Offtopic)

AssProphet (757870) | more than 9 years ago | (#9169060)

... just forward this post to everyone in your address book.
*
It's Tr00!!!!
I f0rw4rd3d it t0 all my fr13ndz, aNd now 1'M a multi-B4ZZZZ1L10NAIRE!!!

*

Re:NOT A SCAM!!! (0)

Anonymous Coward | more than 9 years ago | (#9169143)

I f0rw4rd3d it t0 all my fr13ndz, aNd now 1'M a multi-B4ZZZZ1L10NAIRE!!!

Then why don't you go sit on your yacht and shut the fuck up instead of posting here?

Mmm...google... (0)

Anonymous Coward | more than 9 years ago | (#9169063)

Do you have any shares in that watermelon flavour? That's my favourite.

WINNER! (1)

sketchkid (555690) | more than 9 years ago | (#9169064)

opening: 23.65 closing: 46.13

Re:WINNER! (4, Insightful)

LostCluster (625375) | more than 9 years ago | (#9169135)

opening: 23.65 closing: 46.13

That's highly unlikely. There shouldn't be very many people wishing they had gotten in on the IPO and willing to pay more the same day just by the nature of this Dutch auction scheme. The whole point of choosing this method is to lock out the rich people who want to quickly double their money on same day turn arounds...

Re:WINNER! (0)

Anonymous Coward | more than 9 years ago | (#9169185)

The whole point of choosing this method is to lock out the rich people who want to quickly double their money on same day turn arounds...

Why do you all hate the greedy rich so? They're people too.

smell it (-1, Offtopic)

Anonymous Coward | more than 9 years ago | (#9169065)

smell good don't it

HOW MANY shares? (1)

John Jorsett (171560) | more than 9 years ago | (#9169070)

Why be vague on this detail? Is the reward a fixed number of shares, a dollar figure translated into stock, or what?

Re:HOW MANY shares? (1)

DoraLives (622001) | more than 9 years ago | (#9169128)

Why be vague on this detail? Is the reward a fixed number of shares, a dollar figure translated into stock, or what?

You sir, are looking a gift horse in the mouth. Not considered good form.

Re:HOW MANY shares? (1, Funny)

Anonymous Coward | more than 9 years ago | (#9169129)

Good question. The contest is modelled on the standard "how many jellybeans in a jar", where the traditional prize for being closest to the correct number is the jar full of jellybeans itself. Thus the reward is the total number of shares available in Google. Seems worth a guess anyway.

First and Last (2, Interesting)

stecoop (759508) | more than 9 years ago | (#9169073)

The person that comes closest to estimating the opening and closing

You mean the person that guess the first buying bid of the day and the price of the last buying bid of the day... I bet the first one will be higher than the last one. I like the 20 - 80 from the first poster but has it backwards. I bet its 80 and 20.

Re:First and Last (2, Funny)

atheken (621980) | more than 9 years ago | (#9169275)

My GUESS...

more like $80 opening, $40 closing by the end of the first week of Google trading, mid $20s, where it will stablize.. Or, if we geeks have anything to say about it... $60.22 (think about it...) or $31.415 (decimals shifted to adjust to a possible real world value of G00G stock.) This is like a dotcom, but they have been "developing" for a bit longer, so they might not crash 'n burn maybe.

The real object of the game... (5, Informative)

LostCluster (625375) | more than 9 years ago | (#9169074)

The contest entry form has some interesting subtexts to them...
3. Do you intend to place a bid for shares in the Google IPO? (Yes/No)
4. What price will you bid for Google shares? Enter 0 if you do not intend to bid. The value must be between 0 and 999, inclusive.
5. How many shares do you intend to bid for at this price?
Enter 0 if you do not intend to bid

There's the true motivation for this exercise. The person running this contest clearly states on his site that he's going to try to sell the results of the survey to people who want to have some way of peering into a crystal ball and determining what people would be willing to pay for Google before the dutch auction price is determined.

The day-trader investors who ususually love IPOs hate this Dutch Auction system because it gives them less room to try to buy up the early shares and then sell them the same day to people who wished they had gotten in on the IPO and are now willing to pay more to get their shares at market prices. (Smarter investors would place a limit order rather than a market order and just wait for the day-one spike to wear off and the price to be more in line with reality.)

11. Would you like to be contacted by someone to help you bid for shares in the Google IPO? You will receive one email if you say Yes. (Yes/No)
Talk about "highly targetted e-mail marketing list." That's sure to go to the highest bidder too...

This guy most certainly has a right to make a buck... we just should be smart enough consumers to realize that he's doing so by running this, and possibly withhold our information if we deem it too valuable to hand over.

Re:The real object of the game... (1)

Golgafrinchan (777313) | more than 9 years ago | (#9169154)

The day-trader investors who ususually love IPOs hate this Dutch Auction system because it gives them less room to try to buy up the early shares and then sell them the same day to people who wished they had gotten in on the IPO and are now willing to pay more to get their shares at market prices.

Your average Joe Daytrader cannot do this. The only people who are able to get shares during the immediate beginning of an IPO are insiders, investment banks, friends of the company, etc.

Re:The real object of the game... (2, Informative)

LostCluster (625375) | more than 9 years ago | (#9169235)

Your average Joe Daytrader cannot do this. The only people who are able to get shares during the immediate beginning of an IPO are insiders, investment banks, friends of the company, etc.

Joe Daytrader can't get in on the IPO itself, but he can sit and be the buyer shortly after the bell when first one of the "lucky few" decides to sell their shares, antispating that there will be a lot of Jane Investors calling their brokers later in the day wanting that "hot stock" and willing to pay more.

It's not a certain play, but during IPO mania it worked far too many times for it to be healthy...

Dutch Auctions (1)

Kohonen (717384) | more than 9 years ago | (#9169081)

Why don't other companies also use auction systems to do IPOs? It seems like all of the big financial companies get basically free money for organizing the same thing

Re:Dutch Auctions (0)

Anonymous Coward | more than 9 years ago | (#9169379)

If g*d did not want IPO investors skinned, then he would not have made them ( greedy/fearful ) sheep. So sez a famous Amerikan.

Abuse? (4, Interesting)

vondo (303621) | more than 9 years ago | (#9169089)

It looks to me like the only piece of info needed to register is an e-mail address. With people here capable of supplying thousands of e-mail addresses each, I think you're looking for abuse.

Re:Abuse? (5, Insightful)

danharan (714822) | more than 9 years ago | (#9169141)

Why should he care? He's just trying to figure out what a large number of people are willing to pay for Google shares, so he can game the auction.

Re:Abuse? (1)

AresTheImpaler (570208) | more than 9 years ago | (#9169383)

Why should he care? He's just trying to figure out what a large number of people are willing to pay for Google shares, so he can game the auction.

The problem is that anyone could come up with thousands of figures instead of only one number they believe it is going to be the price. This would not help in getting some good statistic numbers.

Re:Abuse? (0)

Anonymous Coward | more than 9 years ago | (#9169338)

That's why I submitted as abuse@gmail.com

Hmm... (1)

DiscordOfFive (778099) | more than 9 years ago | (#9169094)

Well, this could show what people value google at... or more precisely, how profitable investors think it is. Either way, I'm holding my cards. This isn't a stock I'm gonna buy. I'm not into world domination.

Dear Slashdot (5, Funny)

Seraphim_72 (622457) | more than 9 years ago | (#9169101)

I have a get rich quick scheme and I need your help. Those helping me can be at the bottom of my pyramid scheme, and will get millions of dollars, 3" of wang and all the heart meds you can count with a Cray. Just invoke my ip and I will make you a nigerian just for clicking. I promise....really

Re:Dear Slashdot (2, Funny)

Hard_Code (49548) | more than 9 years ago | (#9169202)

Excellent. I happen to be a member of a board of a charitable foundation which invests in pyramid schemes. Please, sir, kindly send me a picture of your crew with miniature bridge sculptures balanced on their heads (this is important as it will show proof to the Troll Charitable Donation Foundation of your commitment), and I will wire the money as soon as possible!

My Guess (1)

DrLudicrous (607375) | more than 9 years ago | (#9169102)

Opens at $23.50, closes at $67.38.

Re:My Guess (1)

Rosco P. Coltrane (209368) | more than 9 years ago | (#9169114)

Opens at $23.50, closes at $67.38.

You forget the all important "a little over $1 a share after 6 months, about to be delisted."

Re:My Guess (1)

benna (614220) | more than 9 years ago | (#9169381)

I don't understand why everyone seems to think the price will go up on the first day. The auction is designed so the that initial price is as high as people are willing to pay. This means that the price can only go down at least in the short term.

Mind your timestamps children.... (1)

DoraLives (622001) | more than 9 years ago | (#9169104)

I've got first dubs on $37.11 to open and $103.33 to close. Best of luck and may the best guesser win.

Google = genius (4, Insightful)

Anonymous Coward | more than 9 years ago | (#9169106)

Great, let the people decide the stock prices. That way I'm sure Google stock will start out way overpriced.. giving the employee shareholders a grab at an awful lot of dough. After all, everybody loves Google. People have a tendency to use their emotions instead of logic to make purchases. The question is, will Google make money to stay afloat?

Guaranteed skew up (4, Insightful)

shoppa (464619) | more than 9 years ago | (#9169107)

The method of awarding a fixed number of shares (ten) in this contest guarantees that it will skew upwards the price of the stock.

If you made the choice of betting on $1, you would get $10 worth of stock. If you made the choice of betting on $200, you'd get $2000 worth of stock.

Now obviously you don't want to bet too high because if you do then you won't be right at all. But you will tend to bet on the high end, rather than the low end.

P.S. Everything I know about Economics I learned from The Price Is Right.

According to Wikipedia estimates (1, Funny)

Anonymous Coward | more than 9 years ago | (#9169109)

Google [wikipedia.org] will have an IPO value of $100! [wikipedia.org]

my guess (0)

Anonymous Coward | more than 9 years ago | (#9169113)

$18.24 opening, $42.81 closing ;)

Why? (was Re: my guess) (0)

Anonymous Coward | more than 9 years ago | (#9169297)

Open: $21
Close: $14

I don't see why the price shoul be going up.

what value does goole have to offer?
divindend?
just let us know..

Higher price (4, Insightful)

bobthemuse (574400) | more than 9 years ago | (#9169120)

I wonder if the initial price will end up higher than this system was designed to determine.

From my understanding, people bid on it at any price point. When they decide to create X shares, the top bidders will receive those shares, but will pay the price point of the lowest bidder. If this is true, what's to stop me from bidding $500/share to guarantee I get to take part in the IPO? Since I won't have to pay this price, and I probably won't increase the per-share price significantly, an individual doing this could easily be guaranteed as many shares as they like. What happens when a large number of people realize this and it artificially increases the price?

Is there something to prevent this? Is this a desired action (maybe from Google's perspective)? Or am I just completely missing something here....?

Re:Higher price (0)

Anonymous Coward | more than 9 years ago | (#9169178)

If what you say is true, only the richest bidders will be able to buy significant shares at such high prices. Average Joe will not be able to bid 1000 shares at 500 dollars.

Re:Higher price (5, Informative)

LostCluster (625375) | more than 9 years ago | (#9169194)

What happens when a large number of people realize this and it artificially increases the price?

If too many people bid $500/share... then the cutoff price will turn out being something like $400/share, which will likely be artificially high considering the true value of Google.

You'll pay $400/share to get a ton of shares, but then only be able to sell them at their true value which the market will quickly realize is in the sub-$100s. What a way to lose 3/4 of your money!

That's the key of this Dutch Auction system. Instead of the lucky few with the right connections getting a pre-market chance to buy at a lower-than-fair-value price, this takes a stab at determining the fair value before the first shares are distributed. If too many people try to drive the IPO price upwards, everyone will find themselves holding shares that they'll only be able to sell at a loss.

The "I'm smarter-than-you, so I can make a quick buck off this..." gang is really better off sitting this one out.

Re:Higher price (4, Informative)

smallpaul (65919) | more than 9 years ago | (#9169195)

Let's say that the absolute maximum price you are willing to pay is $100/share. What is the incentive to bid a penny higher? Of course you could big much higher just to "guarantee" that you get stock but the goal is not to guarantee that you get stock. The goal is to get stock at a price that makes that stock a good investment. If you bid $500.00 and actually pay $100.00 when you believed that the stok was only a good investment at $60.00 then you are out $40.00 bucks. You should have bid $60.00.

Imagine that you did bid $60.00. Maybe other people will get stock and you won't, but if you believe that they are overpaying then from your point of view they are suckers, not winners. Remember that the goal of the game is not to get Google stock. It is to PROFIT from owning Google stock. If you bid high and get the stock and then watch it slide downward for years after you have lost, not won.

Re:Higher price (1)

G4from128k (686170) | more than 9 years ago | (#9169209)

what's to stop me from bidding $500/share to guarantee I get to take part in the IPO?

Your fear that everyone else will bid $501, that the auction will settle at $500, and that you will end up payng $500 per share. Although it is true that a single person can submit a high bid to "ensure" getting some shares, the extending this strategy to n-players changes the game. In the end, people reallize that the most sensible strategy is to bid what they really think the shares are worth. Bidding any higher than that increases the chance of getting over-valued shares and losing money.

How much would you bid in a Dutch auction for a $20 bill?

But, you are right that this auction will bid up the price because people are not rational -- they tend to be more confident than they should be and they like to "win".

Re:Higher price (1)

LostCluster (625375) | more than 9 years ago | (#9169327)

But, you are right that this auction will bid up the price because people are not rational -- they tend to be more confident than they should be and they like to "win".

If that's what you truely expect to happen, then you should bid what you think a Google share is really worth, and if you "lose" the dutch auction, place a limit order to buy the shares when they fall to the price you wanted. If you're right, the Dutch Auction will end up settling at an overvalued price, but then when the "winners" start placing sell orders they'll end up losers. If you're wrong, all you lose is the fee your broker charges for placing a limit order that never goes through.

Re:Higher price (0)

Anonymous Coward | more than 9 years ago | (#9169215)

You misunderstand. You don't pay the price of the lowest bidder. You pay for the lowest *successful* bidder.

So if you can only afford $20/share but bid $500/share, and a zillion of other people bid $400/share then you're stuck paying $400/share, even if other people also bid $20/share.

Basically you should only bid what you can afford to pay. You won't be forced to pay more, but you can pay less.

(You might be able to put in multiple bids, 100s @ $10/s + 100s @ $20/s to get more shares for your money if the price is below $10, but I'm not sure of the rules)

Re:Higher price (1)

Uber Banker (655221) | more than 9 years ago | (#9169220)

If this is true, what's to stop me from bidding $500/share to guarantee I get to take part in the IPO?

Nothing, other than if enough other people think the same way you really will end up paying that amount - this may go on to answer your other question "What happens when a large number of people realize this and it artificially increases the price?" And the price (last, mid, bid/ask weighted thickness) will collapse as there are no others to maintain the bid side.

Re:Higher price (3, Interesting)

DaoudaW (533025) | more than 9 years ago | (#9169236)

Huh!!!???

The IPO clearly states that Google has the right to reject any bid. They specifically say that if they determine that someone is not bidding in good faith--such as submitting a ridiculously high bid--that they won't accept that bid.

The other problem with your $500 bid is that if a significant number of other bidder think the same as you, you've just bought yourself a $500 stock. Are you willing to take that risk?

Re:Higher price (1)

JPS (58437) | more than 9 years ago | (#9169256)

Well, if you bid $500, this means you are willing to pay up to $500. Period. You might end up paying these, or lower. In a regular auction, you start with a small bet an increase till (a) you have what you want or (b) you have reached your maximum price. In a Dutch auction, you give your maximum price right away, and you will pay the price of the highest bidder among the people who bid too low to have shares.

Psychological factors aside, a Dutch auction is giving exactly the same results as a regular auction but in only one round.

So if a lot of people bet $500, yes, the price could possibly be as much as $500, or at least increase, as the highest bid of the "losers" will be higher.

So well, this is desired: if a lot of people indicate that they are willing to put as much as $500, it makes perfect sense that the price increases...

Re:Higher price (1)

SEWilco (27983) | more than 9 years ago | (#9169307)

Well, as you must be able to pay what you bid, go ahead and bid as high as you want. But if you have $5,000 you'll only be able to bid for 1 share at $5,000, 10 shares at $500, 20 at $250, or 40 at $125. You'll want as many shares as you can. So those playing the high-price game will affect a small number of shares.

Re:Higher price (1)

gl4ss (559668) | more than 9 years ago | (#9169330)

..because what's to stop everyone from doing that and end up paying then..?

i'm not familiar with the dutch system mentioned but i'd figure it be something used on tulip sales and so on maybe ?-) that would make some sense at least anyways and they probably have pretty well smoothed the system at the thousands and thousands of 'em held...

I think the real question is... (5, Insightful)

chrispyman (710460) | more than 9 years ago | (#9169131)

does this person really think that getting wild guesses from thousands of non-investor types will help him determine anything?

Prediction (5, Funny)

Anonymous Coward | more than 9 years ago | (#9169144)

Opening Price: 75cents

MiddayHigh: 150 dollars.

Closing Price: 25 cents.

Google (2, Funny)

Anonymous Coward | more than 9 years ago | (#9169149)

Opening: eleventy-billion
Closing: $Texas

I sell you secrets! (0)

Anonymous Coward | more than 9 years ago | (#9169181)

Send $2.7 million my specal escrow service and I send you full story about Google IPO. Hurry now important very!

Who? (1)

CGP314 (672613) | more than 9 years ago | (#9169188)

I'm interested in how well the public can estimate this demand and the price of the shares to be offered.

He speaks as though 'the public' is a different kind of public from the one that will be bidding on the shares. Gee, I wonder what use he could possibly have for getting a sampling ahead of time...


-Colin [colingregorypalmer.net]

Great idea! (1, Funny)

Anonymous Coward | more than 9 years ago | (#9169190)

Great idea! And you're a great guy!

I'm going to send you my 19 day old P-P-P-Powerbook as thanks!

-Jeff

dutch auction effect (4, Interesting)

shibut (208631) | more than 9 years ago | (#9169199)

Given the large amount of publicity Google's IPO is getting, and assuming the dutch auction will be pretty open to the public (I trust Google for that), the whole point of the dutch auction is to dampen the first day effect and make sure the company, and not day traders, gets most of the upside the market is willing to give it. Notice the assumptions up top, though... Theory doesn't always translate into real life.

And another thing: read the prospectus: the wall st guys are still getting a pretty good cut!

im taking this seriously... (1)

Dragoonkain (704719) | more than 9 years ago | (#9169204)

Google shares are going to be gold, so even if I give my modest guess $41.50-$41.55 for the open price :) now im gonna pray.

WAG's (1)

MrIrwin (761231) | more than 9 years ago | (#9169207)

Look at the SCOX message board on Yahoo finance. They call guessing the next days closing price a WAG - Wild Arse Guess.


With SCOX stock (SCO groups ticker symbol) it has become a kind of sport ;-)

Ahh, spam has made it's way onto Slashdot news! (1)

Kerhop (652872) | more than 9 years ago | (#9169212)

http://money.cnn.com/2004/05/10/technology/google_ scam/?cnn=yes

At least the offer is for free shares instead of trying to con billions from us. :)

futures market (2, Informative)

sybert (192766) | more than 9 years ago | (#9169228)

If you want to get good information on the expected IPO price than you should run a futures market on the opening and closing prices.

tradesports.com [tradesports.com] has a futures market on the relative price of the IPO. There is another futures market for the time of the IPO [technologyreview.com]

ipofinancial.com has a report for sale (1)

mgkimsal2 (200677) | more than 9 years ago | (#9169292)

As long as we're pitching services, :)

IPOFinancial.com [ipofinancial.com] is offering a Google IPO report for sale. It's a reasonable price if anyone is considering actually investing in Google's IPO. As many others have said already, the dutch auction system will put a spin on this which not many high profile IPOs have had (at least recently).

what the heck (1)

bigattichouse (527527) | more than 9 years ago | (#9169325)

opening 25.00 closing 73.95

Re:what the heck (1)

LostCluster (625375) | more than 9 years ago | (#9169351)

opening 25.00 closing 73.95

If there are that many people willing to pay 73.95 for a share of Google such that at the end of the day that's the lowest price at which a share can be had, then just how in your universe did the Dutch Auction settle at 25?

Try filping the closing an opening signs and you might be on to something. Google's more likely to crash downward than rocket upward on day one thanks to the Dutch Auction.

The range will be small, and downwards (3, Interesting)

mveloso (325617) | more than 9 years ago | (#9169359)

One thing I've noticed about the posters is they're not really sure why the dutch auction format is different than the normal IPO process.

In a normal IPO, the investment bank (or brokerage) sets the price, say, $20, then buys the shares off of the issuing company for $20. Any spread off of that goes directly to the brokerage (or investment bank).

This is a Bad Deal for the issuing company, because the spread should have gone to the company, not to the brokerage. Think about it: if MSDW priced a stock at $20, but were able to sell at $200, then the issuing company just lost $180! The brokerage, of course, made $180.

With the dutch auction, there will (or should be) little or no upside to google's stock because the price will be determined by how much people are willing to pay up front. In fact, it will probably drop on the first day, since people confused by this concept will try and flip, leading to a sell imbalance.

Depending on the shares that are to be issued, I'd say that conservatively google's stock should open at anywhere from $175 +- 8%, and drop about 15%. Why $175? Because -everyone- knows google, and companies that are well-known to the public trade at a premium.

The other interesting thing about google is that a savvy investor/hacker could manipulate the earnings by writing a virus that sneakily clicked on all those google ads that appear when you do a google search. Voila, instant earnings! With enough spread, you could do millions of hits a day, which translates to millions of dollars a day (thank you, adwords!)

We'll see.

Danger Will Robinson Danger! (1)

ChipMonk (711367) | more than 9 years ago | (#9169373)

If you live in the United States, DO NOT accept this wager. It is a violation of Securities and Exchange Commission rules to gamble on the price of stocks, except by investing in them.

You know, he's doing a bayesian survey (5, Insightful)

mveloso (325617) | more than 9 years ago | (#9169377)

I just realized - he's doing a bayesian average!

http://www.research.att.com/~volinsky/bma.html

There was a possibly apochryphal story about this. A plane went down in a large area, and they needed to find it. Nobody really knew what happened to it. The leader of the search team went and asked a bunch of pilots where they thought the plane was, after giving them the course, heading, speed, and whatever data was available.

Well, they took the answers, narrowed the search area, then found the plane pretty much where the consensus said it would be.

A bit of thought will give you the reason this might have worked...
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